Revaluations of its HSBC Tower in Manhattan and its Barneys New York department store building in Chicago helped push the IDB Group's Property and Building Corp. well back into the black in its first quarter, following its whopping NIS 453 million loss in 2011.

The company earned NIS 211 million attributable to shareholders, compared with earnings of just NIS 22 million in the same quarter last year. Reappraisal of the two U.S. buildings netted a NIS 170 million gain after taxes. Increased revenues from leasing and apartment sales also contributed to the turnaround.

The results boosted Property and Building's capital equity attributed to shareholders to NIS 1.29 billion. The company, part of the IDB group through its ownership by Discount Investment Corp, generated NIS 112 million in cash flow from operating activities during the quarter, 19% more than in the parallel period of last year.

Its comeback provided the company with a NIS 137 million balance of distributable earnings. But despite its parent company's desperate thirst for cash and its bountiful dividend distributions in past years, Property and Building has refrained from announcing a payout at this point.

Property and Building confirmed in its report the recent disclosure by TheMarker, that it is working with IDB Development and Yitzhak Tshuva's El Ad Group to arrange a settlement for their $625 million debt on their jointly-owned Las Vegas property to a consortium of lenders, including Harel Insurance Investments & Financial Services, Bank Hapoalim, and Mizrahi-Tefahot Bank. The ultimate arrangement is expected to involve a 25% to 60% haircut for the creditors.

Despite its reputation as one of the market's strongest and most highly liquid companies, Property and Building market value has dived 47% over the past 12 months, to just NIS 840 million, following write-offs on its Las Vegas investment and mediocre results on other overseas projects.

The company boasted NIS 211 million in leasing revenues for the quarter, a 65% gain over the same quarter last year. This resulted from properties bought or occupied during 2011, such as the HSBC and Barneys buildings in the U.S. and the central building of the Gav Yam business park in Herzliya.

A quarterly comparison, however, reveals irregular accounting effects. For example, in the first quarter of 2011, the HSBC tower was listed on the company's books based on the equity method, reflecting its share in invested capital, whereas in the first quarter of this year the tower's value was consolidated in its entirety. Eliminating the effects of such accounting changes, leasing revenues would have increased just 40% over the same period last year.

In accordance with International Financial Reporting Standards accounting rules, revenues from housing sales are recognized at the time of occupancy, and these totaled NIS 132 million, on 75 units sold, for the company in the first quarter. That's 86% higher than in the equivalent quarter last year, when just 30 units were sold - indicating some measure of recovery in local housing sales.

"Israel's real estate sector was characterized by stability in the first quarter, as expressed in the level of demand," said Segi Eitan, Property and Building CEO.